Slight change in "plan"

UPDATE as on 26th Mar 2013: I met Vishal Khandelwal, the chief Tribesman of Safal Niveshal on the evening of the day I originally wrote this post. Earlier in the day, he commented and cautioned about uncertainty in how PPFAS mutual fund would perform. We later had a great discussion about the current times and what should be the most favourable investment strategy, and here's further refinement to the plan below

Keep liquidity to benefit very good chances Mr. Market will give us in weeks and months to come. Even though the index is closer to the peak made recently than the bottom made in end of 2011, a large number of stocks of healthy businesses are at their several year lows again. This is interesting. While there's a risk that the stocks can fall further below, but now they're available at much favorable terms than before, and hence it makes sense to keep liquidity and "slowly and carefully catch the falling knife", small trickles at a time and keep accumulating good businesses.

I've a few funds that I don't want to continue, and they're nearly at break-even, and at the end of Financial year, it makes sense to lower the tax liabilities by selling off these investments. This will provide some liquidity, apart from the capital freed up in earlier planned mutual fund SIPs as I wrote below.

Also, regarding PPFAS mutual fund, I'll first try it by putting in a small amount rather than commit to SIPs right away in the NFO, and then see how they perform for next 2-3 years.

All this means that now I have about 70% of my planned monthly savings free for stock accumulation, not to mention the surplus cash inflow every month due to salary hike that'll come on its way very soon :-)

Vishal also suggested to keep the "cash in a liquid fund" so as to further reduce tax liability and still have enough liquidity to pay for stock purchases. HDFC Cash Management Fund is a very low cost (0.2% for direct investors) fund that can help generate decent post tax returns and give the desired liquidity. However, note that one must keep some pure cash liquidity in a savings account for day to day and emergency needs.

The next step now is to now re-analyze the stocks I hold in my portfolio and any new opportunities (here I differ from my earlier statement, but this means that I'm willing to churn the holdings to bring in better ones - where I have much higher conviction to hold and benefit in the long run). I've realized that simply reading doesn't work - it's probably not fun, and I somehow can't learn without hands-on. I know this is not funny, but as long as I can patiently invest, and not get impulsive and start "trading" and write before buying, this will work for me.

P.S: I completed sale of PNB and redirected 75% of the proceeds to buy CARERATINGS and remaining I put into BHEL and CROMPGREAV which were at better price now. Further on, any fresh capital infusion into the portfolio will follow a "write up" on why I'm doing it with clear justification.

Happy Investing and good luck to you and me for the accumulation period!
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Soon after I wrote my plan couple of weeks back, I came across "Parag Parekh's entry into Mutual Funds", and I found about their plan to launch "PPFAS Long Term Value Fund". I'm excited to know that an able value investor is going to lead a value oriented mutual fund, probably for the first time in India. It's principles align well with what a value investor thinks.

Accordingly, I'm making slight change in the mutual fund investment plan. Instead of diversifying into 5 equity based mutual funds through SIP route, I now plan to route major funds into PPFAS mutual fund when it is launched, and I've started SIPs into HDFC Top 200 Fund and SBI Emerging businesses fund. I wanted to get some exposure to very good skills of Franklin Templeton mutual fund, but now I don't have a choice - or I have a much better choice :-)

Also, considering a renewed confidence in value investing based on the learning that "it takes only a few weeks for stocks to outperform even after a prolonged period of underperformance", I'll start analyzing my existing investments, starting with the one which has maximum portfolio exposure, and address re-allocation. This means, that I'll analyze business again in light of latest developments and financial reports, and revise the right purchase price range, and if stock falls to this range and I've surplus funds (after setting aside for SIPs), I'll make incremental investments in most favourable holdings (the ones available at greatest discount to my "right purchase price", not necessarily the one in which I'm making maximum loss (I'll not try to blindly average and bring cost down - I'll try to make right capital allocation)

I'll also need to take a decision soon about another large investment - into real estate, and how to manage continuing investing in equity. More on that after some time...